My View: Let's chip away at property tax inequity
In November, metro-area voters approved a property tax bond to build several thousand units of affordable housing.
Unfortunately, the people hit hardest by the tax bill — certainly in Portland, but doubtless other places as well — are the people who can least afford it. That's because of the tax unfairness created by Measure 50, passed in 1997 — which can only be changed by a statewide vote.
For many years, state Sen. Mark Hass, D-Beaverton, has been a lonely voice calling for an effort to send voters a proposal to fix the problem. But earlier in 2018, Gov. Kate Brown promised to help him. And a recent poll shows that one idea to solve a significant part of the problem would have a chance of passing.
The problem requires some explanation. Measure 50 provides that the assessed value of a property, for tax purposes, can't increase by more than 3 percent a year, no matter what happens to the real market value. Over time, that means that properties in fast-gentrifying areas with rising real market values, like inner Northeast Portland, pay much less than their fair share of property taxes, while properties in areas that haven't gentrified pay more than their fair share.
A random example: According to Zillow, 13630 N.E. Hassalo St., in East Portland has a real market value of $314,000 but a property tax assessed value of $194,000, and paid $4,095 in property taxes in 2017.
Meanwhile, 626 N.E. 19th Ave., in inner Northeast Portland has an estimated real market value of $518,000 but an assessed value of only $125,400, and paid $3,579 in taxes in 2017.
As a result, the Hassalo owners will pay more in extra taxes for the housing bond than the owners on Northeast 19th.
A complete fix to Measure 50 would be difficult and very complicated, and polls on various proposals have never been encouraging. But there's an important, limited fix that could pass.
Bond measures are especially problematic. Many people in outer East Portland don't pay extra taxes when a tax levy passes, because they already are paying the maximum allowed by something called Measure 5, which limits each property's levy bill based on real market value. But they get hammered when bonds pass, because Measure 5 doesn't apply to bonds.
So I suggest a ballot measure that simply says that when future bond measures pass, each property owner's share should be based on what their property is actually worth, rather than the Measure 50 value.
That would not immediately affect anyone, and would not raise the overall tax level. It would just mean that when future bond measures pass, the bill would be divided fairly.
A recent poll showed this idea starts with a 7-point lead. I don't think anyone would campaign against it; it does not hurt any particular interest group. The media has generally been good on this issue. And unions should support it. Doing so would demonstrate that they care about tax fairness for its own sake, even if it doesn't mean more money for services.
It might not pass. It's still a bit complicated, and a 7-point lead isn't much. But after decades of increasing unfairness, it's worth a try.